Plans for the market, which dates back to 1235, include a new water feature, public seating, lighting scheme and a reduction in permanent market stalls, with temporary ones taking their place.
The council will use its Commercial Street car park, opposite the Carlsberg factory, as a temporary location during the regeneration work.West Northamptonshire Council said the Commercial Street car park was the best location for the moveFruit and vegetable stallholder Joe Fitzgerald said the footfall at Commercial Street car park was "not going to be the same".
Daniel Lister, cabinet member for economic development, town centre regeneration and growth, said: "The Market Square is literally and metaphorically the heart of Northampton and we all agree change is needed to ensure it retains that status and continues to be a place people want to visit. "Commercial Street offers the only opportunity to keep the market traders together in a cohesive group, right next to a large car park and in a highly visible part of town.
"We very much hope loyal customers of the market arriving by bus will walk the extra 500m to support the traders, but will also think the location could introduce a market to a whole new range of customers."
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